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BizReport : Trends & Ideas archives : August 09, 2016

Contactless POS transactions on the rise

The use of contactless point of sale terminal transactions is set to soar, according to Juniper Research's most recent research, but total value will remain low.

by Helen Leggatt

Contactless point of sale (POS) terminal transactions, such as in-store via cards, mobile devices and wearable devices, will reach almost $500 billion a year globally by 2017, according to a new whitepaper from Juniper Research. That is up from an estimated $321 billion such transactions this year.

According to The Payments Review, "contactless cards are very common in most developed countries". In the UK, where 88 million contactless cards have been issued, almost 188 million contactless transactions took place in April of this year. In Australia, two-thirds (66%) of cardholders have a contactless card of which more than half (53%) 'tap and go' at least once per week.

But what about the U.S.? An interesting article by Karen Webster over at takes an indepth look at why "contactless cards are as scarce as hen's teeth today in the U.S.".

According to Karen, "it seems that consumers really aren't all that into contactless payments at the physical point of sale. Apple Pay is the mobile wallet that's been in the U.S. market the longest - launched in September of 2014 to much fanfare -- and uses NFC technology as its enabling technology. We've been tracking its adoption and usage ever since --and have multiple observations over the 18-months lifespan of Apple Pay. What we observed in March 2016, compared to earlier results, was surprising. The number of people who've installed Apple Pay and used it at least once is stronger than it's ever been. But repeat usage is down -- and has been going in reverse ever since March of 2015."

With most contactless payments being or a relatively low value, the total value will represent just 5% of all POS transactions next year. Furthermore, contactless terminals remain in the minority in many regions, accounting for just 20% of all POS terminals worldwide. Juniper forecasts these numbers will rise sharply, due in part to retailer obligations to card companies, and rise to more than 2 out of 3 POS terminals by 2021, by which time smartphone and tablet-based mPOS terminals will handle 20% of all retail POS transaction value.

Tags: banking, contactless payments, finance, mobile payments, payment method trends, retail, technology

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